Vietnam Ratifies Its EU Free Trade Agreement and Other Investment Laws
Vietnam's executive body, the National Assembly, has ratified key investment treaty agreements with the European Union ("EU") and passed a number of other laws relevant to foreign investors.
The ninth session of the 14th National Assembly, Vietnam's supreme organ of state power, was held in two phases between May 20, 2020, and June 18, 2020. A unique feature of the ninth session is that the first phase was a virtual meeting, held for the first time by way of videoconference. Once the National Assembly met in person during the second phase, a number of laws and resolutions were passed that will be of significant interest to foreign investors across all industries.
Key highlights include:
- The EU-Vietnam Free Trade Agreement ("EVFTA") was ratified. The EVFTA sets out a schedule for easing import duties that will eventually eliminate almost all tariffs on goods traded between Vietnam and the EU, while opening up greater investment opportunities for EU companies in Vietnam. With respect to investments and the provision of services, most-favoured-nation and national treatment will be afforded, except in certain excluded sectors. The EU-Vietnam Investment Protection Agreement ("EVIPA") was also ratified, setting out investment protection and dispute settlement procedures. The ratifications were formally notified to the EU by diplomatic note on June 18, 2020. The EVFTA is scheduled to enter into force on August 1, 2020, whereas the EVIPA still has to be ratified by all EU Member States before its entry into force.
- The new Law on Enterprises 2019 and Law on Investment 2019 were adopted. These laws will replace the existing corresponding legislation of 2014, taking effect on January 1, 2021.
- A new Law on Mediation and Dialogue at Courts was introduced. It aims to encourage resolution of civil disputes through structured mediation rather than formal court proceedings.
- The long-awaited Public-Private Partnership ("PPP") Law was passed. The law regulates investment activities and attracting private investment under the PPP model, with a focus on five key industries: (i) transport; (ii) power grid and plants; (iii) water and waste treatment; (iv) healthcare and education; and (v) information technology. The Construction Law was also amended.
- The National Assembly resolved to ratify the Abolition of Forced Labour Convention, 1957 (No. 105).
